With the drama in Congress on the back burner for the moment, traders are bracing for the flood of quarterly earnings reports due to start Tuesday. Alcoa (AA), the blue-chip aluminum maker, is expected to post earnings of six cents a share on sales of $5.6 billion after the closing bell.

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Analysts struck a cautious tone heading into earnings season.

"We suspect earnings season will be a negative for the market overall," Barry Knapp, an analyst at Barclays wrote in a note to clients. He notes that revenue performance could stabilize this quarter after sales repeatedly surprised to the downside during the third quarter. However, he warns that companies' forward guidance could surprise market participants.

On the European front, the unemployment rate in the eurozone ticked up by 0.1-percentage point in November to 11.8% -- a record high as the economy there continues reeling from the debt crisis.